The Business Architecture Approach to Formulate and ......Strategy Formulate e t e and rn Key Group of Activities in the Formulation, Implementation and Execution of a Strategy!4 Analyze

The Business Architecture Approach to Formulate and Implement a Strategy that Leverages the Business Ecosystem Pierre Hadaya Professor, School of Management of the Université du Québec à Montréal and Cofounder of ASATE Group

Association for Strategic Planning 2019 Conference

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Group© ASATE Group Inc. 2019

Table of Content

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The Difficulties Organizations Face while Formulating and Implementing their Strategy

The Missing Link: The Business Architecture Approach

The Business Architecture Approach to Leverage the Business Ecosystem

The Benefits of the Business Architecture Approach

© ASATE Group Inc. 2019ASATEGroupe

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The Difficulties Organizations Face while Formulating and Implementing their Strategy

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Strategy

Formulate

Execute Implement

Engage and Govern

Key Group of Activities in the Formulation, Implementation and Execution of a Strategy

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Analyze external and internal environments of the organization, formulate and analyze strategy alternatives and choose the most appropriate

Identify and execute the transformations required so the organization can execute its strategy

Operate the organization in perfect alignment with the strategy

Motivate the members of the organization to embrace change and be on the lookout for events and new insights to make the necessary adjustments to improve the formulation, implementation and execution of the strategy

A Transformation = A lasting change (i.e., acquisition/creation, modification or sales/retirement) made to a “building block” of the organization

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Most Organizations Are Still Facing Important Difficulties in Their Strategic Endeavours

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of organizations are satisfied with their strategy formulation process(McKinsey Quarterly, 2007)

of organizations have difficulties implementing their strategy (The Economist Intelligence Unit, 2013)

of strategic initiatives are failures (Candido et Santos, 2015)

of organizations are unable to execute their strategy (Fortune, 1999)

45%

61%

50-90%

Up to70%

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The Main Causes of These Difficulties (1/2)

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The organization does not have a real strategy Result: The organization has great difficulty in making the right choices to differentiate itself positively from its competitors

The feasibility analysis of the strategy alternatives are not rigorous enough Result: The organization discovers too late that it does not have the means to implement its selected strategy or that competitors, with greater means and a similar strategy, are implementing it at a faster pace

The strategy is communicated without explaining how it will be implemented Result: Members of the organization do nothing or do things that are at odds with each other and with the strategy

The long-term financial plan and yearly budgets are not aligned with the strategy Result: Strategy implementation costs are underestimated and the financial performance improvements are largely overestimated

The transformation projects are poorly selected Result: Selected projects are designed primarily to solve local issues rather than actually implementing the strategy

People focus too much on the short term Result: The implementation of the strategy is constantly delayed and opportunities are missed

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The Main Causes of These Difficulties (2/2)

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Priorities are not clearly defined Result: The organization tries unsuccessfully to do everything at the same time

The transformation projects are executed in a sub-optimal order Result: Transformations cost more and take more time than they should while potential synergies are lost

The needed mid- to long-term business transformations are not identified Result: The IT team is continually in a reactive mode and more often than not only "patches" IT systems which makes more difficult to evolve in the future

The budgeting process impairs strategy implementation Result: Transformation capacity is wasted and, in doing so, the implementation of the strategy takes too much time

The leadership is inadequate Results: Members of the organization resist change

The organization does not take sufficient account of internal and external events Results: Some issues are never resolved and opportunities are missed


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Several best practices have been proposed to help organizations address the causes of these difficulties

Unfortunately, they are insufficient to completely resolve all of the difficulties

Current Best Practices Are Not Enough

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There is a missing link


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The Missing Link:The Business Architecture Approach

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What Is the Business Architecture Approach?

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A rigorous organizational-transformation strategic planning approach

Based on proven methods used in major construction projects

Business architecture team

Engineering Team

Transformation Plan

Master Schedule

Overall Plan

Target Business Architecture

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The fundamental organization of a system embodied in its components and the relationships that each of these components have with each other and with the environment

Adapted from the ANSI/IEEE 1471-2000 standard

What Is an Architecture ?

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What Is a Target Business Architecture?

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The target business architecture must be designed in increments, each of which focuses on one or a few slices of the organization at a time (e.g., a process or organizational unit)The order in which the slices are designed must be based on their importance to the implementation of the strategy

It identifies the business architecture building blocks required together with their key characteristics and how they must work together

… and how they will need to work with these building blocks

Business capabilities

Processes Organizational units

Technology assets

Brands

Natural ressources

Business functionsKnow-how

Information

Describes how the organization will have to function in the future to be able to execute its strategy in full


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The transformation plan (TP) identifies and sequences the transformation projects that must be executed during the next three to five years inorder to improve the organization’sability to execute its strategy

What Is a Transformation Plan?

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Proj

ects

ess

entia

lto

the

stra

tegy

A sound transformation

plan

Rea

dine

ss &

cap

acity

Change managementTransformation risks

Projec

t ben

efits

Project costs

Strategy

Regulations

Current enterprise

architecture

Target enterprise

architecture

Tran

sform

ation

depe

nden

cies

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What Is the Business Architecture Practice?

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Implement the strategy

Formulate the strategy

Architect the TBA

Architect the TTAs

Elaborate the TP

Execute the TPEnga

ge a

nd G

over

n Supported by the

business architecture

practice

The responsibility of the business

architecture practice

Business architecture practice only

indirectly involved

Legend

Execute the strategy

Responsible for architecting the TBA and elaborating the TP, and contributes to other strategy formulation, implementation and execution activities

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The Role of the Business Architecture Practice in the Strategy Formulation Process

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Assess internal

environment

Define and analyze strategy

alternatives

Assess external

environment

Select final strategyStart End

Initiate the strategy

formulation process

Define values,

mission and vision

Identifies the strengths and weaknesses of the

organization’s capabilities

Business capabilities

Processes Organizational units

IT and other technology assets

Brands

Natural ressource

deposits

Business functionsKnow-how

Information

Helps assess the feasibility of each strategy alternative by

creating an outline of the TBA and TP for each of them

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Business Architecture Team Should Work for the Chief Strategy Officer

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Chief Strategy Officer

Strategy Office

Business Architecture

Office

Enterprise Performance Management

Office

Change Management Support Office

Transformation Project

Management Office

CEO

Office of Strategy Management

Business Process

Management Office


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Using the Business Architecture Approach to Leverage the Business Ecosystem


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Partner Ecosystem - an Example

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Your organization

Mine Reduction mill Smelter

Hot roller

Cold rollerCan makerCan warehouse

Bottler Bottler warehouse Retailer

warehouse Retailer store Consumer

Recycle center

Remelter

Bank Other partners

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Three Scenarios

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Acquiring new or upgrading existing capabilities through outsourcing

Optimizing parts of your supply chain

Helping your supply chain partners optimize their internal architecture


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Scenario 1: Acquiring New or Upgrading Existing Capabilities Through Outsourcing

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Steps Activities Done during strategy …

Role of the business architect

Example

1Identify the capabilities your organization needs to acquire or improve

Formulation Support Process electronic payments

2

For each of the identified capabilities, decide whether they need to be built internally or outsourced to a partner

Formulation or implementation Support Outource

3For each of the capabilities that must be outsourced, select the right partner

Formulation or implementation Support to PayPal

4 Link the partner’s capabilities to those of your organization Implementation Support and

controlSell on the website

PayPal


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Scenario 2: Helping Your Supply Chain Partners Optimize Their Internal Architecture

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Example

1Identify supply chain partners whose better performance could help improve yours

Formulation Support

Similarly to Toyota’s TPS deployment

approach

2

Train and coach the selected partners on using the business architecture approach to improve their performance (and yours)

Implementation Support


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Scenario 3: Optimizing Parts of Your Supply Chain

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Example

1 Identify opportunities to optimize your supply chain Formulation Support

Combine in oneplant operatedby both you andyour can makingpartner Eliminate CanWarehouse

2 Select the right partner(s) Formulation or implementation Support

3Design the target business architecture related to the opportunity

Implementation Lead

4 Elaborate the transformation plan Implementation Lead

5 Execute the transformation plan Implementation Support


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The Benefits of the Business Architecture Approach


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Benefits of the Business Architecture Approach

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Effectiveness Efficiency Agility

When well integrated into the strategy management system, the business architecture approach enables organizations to strike the balance between

urgency and diligence that is essential to the successful formulation, implementation and execution of a winning strategy

These benefits are even more important when the business architecture approach is used to optimize the organization and its

business ecosystem


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For More Information

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Available on Amazon

www.asategroup.com

Pierre Hadaya: [email protected] [email protected]

Documents

The Business Architecture Approach to Formulate and ......Strategy Formulate e t e and rn Key Group of Activities in the Formulation, Implementation and Execution of a Strategy!4 Analyze